Tata Motors Q3 disappoints, analysts lower targets, ratings; stock tanks 9%

Tata Motors’ stock sank as much as 9.06 per cent to hit a fresh 52-week low of Rs 684.25 on Thursday following disappointing Q3 results. The stock closed 7.37 per cent lower at Rs 697, making it the biggest loser on the BSE Sensex, while the BSE Sensex finished 0.30 per cent higher at 76,759.81 points. 

Several analysts have revised their targets and ratings for the stock. Nuvama has cut its FY25E Ebitda estimate by 4 per cent. Analysts expect a muted 2 per cent revenue and Ebitda CAGR from FY25–27E, with Jaguar Land Rover (JLR) volumes expected to contract (-4 per cent CAGR) due to order book exhaustion, discontinuation of Jaguar models, and weak demand across regions. The brokerage has lowered its target price to Rs 720 from Rs 750, and maintained a 'reduce' rating. 

Considering the challenges in China, InCred Equities reduced its FY25F sales guidance and increased investments, although free cash flow (FCF) guidance remained unch­anged. The firm maintained a ‘reduce’ rating with a target price of Rs 746. 

Despite reducing their FY25E JLR revenue guidance to 29 billion pounds (from 30 billion pounds), Emkay maintained its Ebit margin and FCF targets and noted improvement in India’s electric passenger vehicle business. They reduced their EPS estimates by around 2.5 per cent but kept a ‘buy’ rating with a target price of Rs 950. 

Analysts at Motilal Oswal warned of potential margin pressure due to weak demand in key regions, rising costs, and the ramp-up of EV production, which could be margin-dilutive. They lowered their FY25 and FY26 Ebitda estimates by 3 per cent and 5 per cent, respectively, maintaining a 'neutral' rating with a target price of Rs 755.

 

Among global brokerages, Morgan Stanley reportedly cut its target to Rs 853 from Rs 920, while maintaining an ‘equal weight’ rating. Jefferies downgraded the stock to 'underperform' from 'buy' with a reduced target of Rs 660, and Goldman Sachs kept a 'neutral' rating with a target of Rs 800. However, CLSA bucked the trend, maintaining an 'outperform' rating with a target of Rs 930.